The net photosynthetic rate per unit of foliage was studied in two-year old cuttings of Norway spruce (Picea abies (L.) H. Karst.), representing four clones, at varying temperature and soil moisture. The CO2 compensation point (Γ), photorespiration, dark respiration, and water balance were also investigated. All these characteristics indicated differences among the clones. A correlation between CO2 exchange and transpiration suggested that stomatal control determined at least a part of this variation during a favourable water balance. An inverse relationship existed between Γ and net photosynthetic rate, and the same curvilinear model explained this variation in unstressed as well as stressed plants at a given temperature. An increase in Γ seems to be a normal result of water stress, particularly at high temperature, indicating an increase in mesophyll resistance to CO2 diffusion. This result was in agreement with calculated values of mesophyll resistance. It also supported our earlier conclusions about the significance of mesophyll resistance during water stress.